Germany to pull plug on solar subsidies by 2018

July 8, 2013

A worker checks solar panels on the roof of Conergy's solar panel plant in Frankfurt an der Oder. Germany will stop subsidising solar energy by 2018 at the latest, its environment minister said Monday after last year initiating a scaling-back of generous state support for the faltering industry.

Germany will stop subsidising solar energy by 2018 at the latest, its environment minister said Monday after last year initiating a scaling-back of generous state support for the faltering industry.

Peter Altmaier of Chancellor Angela Merkel's Christian Democratic Union had fought to set a ceiling of solar power capacity above which the government would no longer offer its financial backing.

He said Monday that the limit of 52 gigawatts would be reached by 2017 or 2018. Currently solar panels installed in Germany generate 34 gigawatts of power.

"The development of solar energy ran out of control in the last three years," Altmaier told a news conference.

The system of subsidies, under which solar energy producers are paid a guaranteed price for each kilowatt-hour of power generated, created a boom in recent years, making Germany a global leader in the field.

The farm sector in particular seized upon solar power as a chance to supplement income, and the low price of solar panels from Asia contributed to the craze.

The state support was justified in large part by Germany's much-heralded "energy revolution" in which it is phasing out nuclear power and aiming to produce 80 percent of its power with renewable resources by 2050.

But solar energy is notoriously unreliable as a power source and Germany has seen its market hobbled by oversupply and ferocious competition from players such as China.

Merkel, campaigning for a third term, has promised an overhaul of subsidies for renewable energy after the September general election, amid criticism particularly from the energy industry.

Berlin "has so far invested 216 billion euros ($278 billion) in renewables and the biggest chunk went to solar, the technology which does least to ensure the power supply," said the head of industrial group Siemens, Peter Loescher, in an interview published in the business daily Handelsblatt on Monday.

Germany has seen a wave of solar company insolvencies and the number of people employed in the industry fell to 87,000 in 2012 from 110,900 a year earlier, while sales plummeted by 11.9 billion euros, according to government figures.

Solar panels are at the heart of a current trade spat between China and the European Union, which accuses the Chinese of selling its solar panels below cost.

German Environment Minister Peter Altmaier said Friday his country would never again return to nuclear energy, hitting back at a top EU official who doubted Berlin's commitment to phase out nuclear power.

(AP)—German engineering company Bosch said Friday that it is abandoning its solar energy business, because there is no way to make it economically viable amid overcapacity and huge price pressure in the industry.

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12 comments

"Germany will stop subsidising solar energy by 2018" and i bet the price of solar power will fall even more just as it has in the past 4 years as a result of less subsidies. Solar companies won't be permitted to take subsidies for granted because there will be less demand and so they will be forced out of their comfort zone to be more productive/produce more supply. Just let the markets work and we'll have better end results.

By 2018 it is unlikely solar will need any subsidy. Right now Spain is starting a new large solar installation without subsidies. They have projected costs at $1.41/watt.

At $1.41/watt solar even in not-very-sunny northern Germany would have a LCOE of around $0.10/kWh. That's lower than gas peaker power, than new coal or new nuclear.

And after five more years of decreasing panel prices and BOS costs we'll probably be below $1/watt. Panel manufacturing prices are expected to drop by 1/3rd over the next four years.--

Germany structured their subsidies in a way that lit a fire under the market. By giving long term Feed-in Tariffs (FiTs) they created a mechanism for owners to make more profit by lowering system cost. It worked like a charm. Market juice.

Exactly. The prices for solar have dropped to a degree no one could have imagined when the subsidies started. So it's OK to phase out subsidies in an area where they are no longer needed.Though to be fair: the amount of subsidies payed out by then for solar will still be microscopic compared to the subsidies coal and nuclear have gotten in their time - and are still getting. So any kind of hype over 'expensive subsidies for solar' is completely inappropriate.According to this study:http://www.heise....3/1.html

If you look further into the study then renewebales have gotten more than coal per kWh (7.6ct) since 2007 and more than nuclear since 2010.This is due to a forced pace of the changeover and needed investments.

While this may seem expensive at first glance if one compares that to adjusted Euros in the first years of nuclear then thing look very different: Nuclear back then got more than 70ct/kWh in subsidies...no that is not a typo: more than seventy cent!)

Compared to that the changeover is truly a bargain on all fronts - even if you add in needed infrastructure changes and storage technologies.

Germany will not end subsidies in 2018. They will stop signing new 20 year subsidy contracts at that point.

Its a huge difference.

One person noted that the price per watt of solar is now low. It could be zero, and it would be at least $0.50/kWh in developed countries. The price is now dominated by the installation costs like steel and concrete.

The real down spiral for these ritualist, useless programs has started, but will accelerate.